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Price Discrimination in Competitive Markets

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  • Locay, Luis
  • Rodriguez, Alvaro

Abstract

The authors present models in which price discrimination in the context of a two-part price can occur in some competitive markets. Purchases take place in groups, which choose which firms to patronize. While firms are perfectly competitive with respect to groups, they have some market power over individual consumers, who are constrained by their group's choices. The authors find that firms will charge an entry fee that is below marginal cost and the second part of the price is marked up above marginal cost. The markup not only is positive but increases with the quality of the product. Copyright 1992 by University of Chicago Press.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 100 (1992)
Issue (Month): 5 (October)
Pages: 954-65

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Handle: RePEc:ucp:jpolec:v:100:y:1992:i:5:p:954-65

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Cited by:
  1. R. Preston McAfee & Hugo Mialon & Sue Mialon, 2005. "Does Large Price Discrimination Imply Great Market Power?," Emory Economics 0525, Department of Economics, Emory University (Atlanta).
  2. Winston T.H. Koh, 2005. "Household Demand, Network Externality Effects and Intertemporal Price Discrimination," Microeconomics Working Papers 22455, East Asian Bureau of Economic Research.
  3. Chien-Ping Chen, 2009. "A Puzzle or a Choice: Uniform Pricing for Motion Pictures at the Box," Atlantic Economic Journal, International Atlantic Economic Society, vol. 37(1), pages 73-85, March.
  4. Steven C. Blank & Gary D. Thompson, 2004. "Can/Should/Will A Niche Become the Norm? Organic Agriculture's Short Past and Long Future," Contemporary Economic Policy, Western Economic Association International, vol. 22(4), pages 483-503, October.
  5. Ricard Gil & Wesley Hartmann, 2007. "The Role and Determinants of Concession Sales in Movie Theaters: Evidence from the Spanish Exhibition Industry," Review of Industrial Organization, Springer, vol. 30(4), pages 325-347, June.
  6. Udo Schmidt-Mohr & J. Villas-Boas, 2008. "Competitive product lines with quality constraints," Quantitative Marketing and Economics, Springer, vol. 6(1), pages 1-16, March.
  7. Kutsal Dogan & Ernan Haruvy & Ram Rao, 2010. "Who should practice price discrimination using rebates in an asymmetric duopoly?," Quantitative Marketing and Economics, Springer, vol. 8(1), pages 61-90, March.
  8. D'Elia, Enrico, 2005. "Actual and perceived inflation," MPRA Paper 36018, University Library of Munich, Germany.

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